WASHINGTON, DC (March 5, 2024) — Optimism and opportunity, balanced against a world in flux, are influencing global investment decisions, according to a new report by the nonpartisan Milken Institute. The Global Opportunity Index (GOI), released today, explores the global economic landscape to help businesses make foreign investment decisions and governments identify policies for attracting foreign capital.
The report reveals noteworthy trends, such as shifts in investor sentiments favoring Latin American countries, as capital inflows to China became negative in 2022 for the first time since 2015. As such, Latin America has experienced a surge in investment inflows, with Mexico and Brazil jointly accounting for more than 60 percent of foreign direct investments in the region. Both countries stand out for their robust economic fundamentals, making them attractive investment destinations compared to other emerging economies. Mexico's allure stems from its geographical location, positive business perception, and high economic openness. Brazil, in contrast, benefits from advancements in financial services despite having a less favorable business perception.
“While advanced economies provide stability, investors seeking high-growth returns continue to show interest in emerging and developing economies,” said Maggie Switek, PhD, senior director at the Milken Institute and co-author of the report. “The GOI provides a simple yet comprehensive benchmark of international investment conditions, proving vital to investors interested in redirecting their capital flows in response to changing geopolitical conditions.”
This year Denmark claimed the No. 1 ranking, while Sweden dropped to No. 2, followed by Finland at No. 3. The United States gained one spot on the index, moving up to the fourth position. A standout feature is the US's top ranking in Institutional Frameworks. However, the country faces challenges in Economic Fundamentals as a result of relatively high central government debt and considerable inflation.
As major economies grapple with a year and a half of interest rate hikes, emerging and developing markets now find themselves in competition with advanced economies for capital. The report urges investors focused on advanced economies to not overlook economically emerging regions, particularly in the current global landscape of ongoing inflationary pressures and higher interest rates.
“Emerging and developing economies in Asia and Latin America are in the spotlight as policymakers and investors seek to diversify critical supply chains including semiconductors, pharmaceuticals, and clean energy materials and technologies,” said David Talbot, PhD, director at the Milken Institute who leads Geo-Economics research and policy programming for MI Finance. “The GOI is an essential tool for decision-makers who are looking to both attract capital and build resilience amidst the reconfiguration of global trade and investment.”
The GOI rankings are available as an interactive website that allows users to personalize their experience based on individual interests using a variety of visual elements, including tables and heatmaps.
“The Global Opportunity Index serves as a compass for those navigating the complexities of global investments. The index provides stakeholders with crucial insights to seize opportunities and craft resilient investment strategies. By revealing emerging trends and spotlighting the strengths and challenges of diverse economies, the GOI gives decision-makers a comprehensive global perspective to harness the untapped potential and foster sustainable growth across international markets,” said Laura Deal Lacey, Executive Vice President of MI International at the Milken Institute.
MI International extends the reach and impact of Milken Institute programs, events, and research by focusing on the role that health, finance, and philanthropy play in addressing social and economic issues around the world. Milken Institute’s inaugural Global Investors’ Symposium will take place on March 26 at The Regent Hong Kong. Under the theme “Thriving Together: Bridging Global Markets,” the Symposium’s program will delve into forces shaping Asia and the world and amplify the collaborative spirit between public and private sectors in tackling various topical and critical issues in the finance industry. It is one of several Milken Institute global events and programming throughout the year that feature CEOs, CIOs, policymakers, business and investment leaders, and experts.
How the Global Opportunity Index Evaluates Countries:
To create the index, the Milken Institute evaluates investment opportunities through 100 variables organized into five categories and 14 sub-categories. The five major categories are: Business Perception, Financial Services, International Standards & Policy, Economic Fundamentals, and Institutional Frameworks. The variables within these categories measure all angles of a country’s investment potential, including economic openness and performance, business constraints, and workforce talent and diversity. Data sources include the World Bank, the International Monetary Fund, and the United Nations.
Download the full report.
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About the Milken Institute
The Milken Institute is a nonprofit, nonpartisan think tank focused on accelerating measurable progress on the path to a meaningful life. With a focus on financial, physical, mental, and environmental health, we bring together the best ideas and innovative resourcing to develop blueprints for tackling some of our most critical global issues through the lens of what’s pressing now and what’s coming next.
For more information, visit: www.milkeninstitute.org.